The Rosett Report

In North Korea's Warning to Diplomats, A Small Cash Windfall for Kim?

Cynical this may be, but when it comes to puzzling out North Korea, never underestimate the appetite for hard cash — whether in amounts big or small. North Korea’s regime has specialized over the years in wringing every possible dollar out of every feasible racket, from missile deals to counterfeiting U.S. currency to selling narcotics out of North Korean embassies to diverting for its own uses international aid that was meant for starving North Korean children. This is part of how the Pyongyang regime survives.

That is what came to mind while I was reading today about North Korea’s warning to foreign diplomats to consider leaving Pyongyang before April 10. Though, before I explain, please allow me to add that of course, Pyongyang may have had much bigger reasons to issue this warning. North Korea’s  barrage of threats in recent weeks — coupled with such matters as its February nuclear test, its proliferation links to Iran, and the inexperience of its third-generation young tyrant — has provoked all sorts of speculation about what’s really going on.  Maybe this is an extreme version of North Korea’s time-tested nuclear extortion racket — prelude to seeking concessions at a bargaining table. Maybe it reflects young Kim’s efforts to consolidate power at home. Maybe the new dictator is so gung-ho, or so out of touch with reality, that he really thinks it’s a good idea — almost as thrilling as a visit from Dennis Rodman — to provoke a hot war. Maybe he’s not really in charge, and the threats are emanating from an internal struggle we can’t see. Maybe, maybe… Though whatever is going on in the big picture, to credit the Pyongyang regime with kindly concern for the welfare of foreign diplomats just doesn’t wash; this is a state that doesn’t mind hanging on to foreigners it has forcibly abducted from their home countries.

But one small implication of this warning does seem clear. If foreign embassies and international organizations in Pyongyang choose to heed the alarm, and start evacuating their personnel from North Korea, then those departing foreigners will have to buy airline tickets for the trip. And in North Korea, that pretty much means buying tickets on North Korea’s state airline, Air Koryo. To the best of my knowledge, foreigners are required to pay for those tickets with hard cash. The price may not be enormous — items here and there on the internet suggest the business class fare from Pyongyang to Beijing amounts to a a bit under $400. Nor is the diplomatic corps in Pyongyang very large — totaling two dozen or so embassies as far a I can tell, plus assorted offices of the United Nations and whatnot. But potentially all that otherwise unscheduled travel could add up — if multiple staffers from multiple missions start buying tickets out of the country. Especially if it turns out there is no dire emergency, and they must then buy tickets to return to Pyongyang.

Of course, diplomats who leave the country would no longer be spending money for daily living — or at least not on such amenities as shops and restaurants, such as they are — in North Korea. That might offset some of the airline ticket windfall. On the other hand, unless foreign countries and international organizations actually close down their entire missions, it’s quite likely they will continue paying rent, local staff costs, and all those other expenses that rarely figure in the news, but do constitute a flow of cash to the North Korean regime. My guess is that, net, a genuine evacuation would work out to a cash windfall for Pyongyang. Not massive, mind you. But in the cash-hungry realms of the North Korean state, not utterly negligible either. I’m not saying this is the reason for the warning. But it’s one of the likely results. It’s good bet that somewhere in a corner of the Pyongyang bureaucracy, someone is making the actual calculations of just how much this kind of evacuation might generate in hard cash.

(Thumbnail on PJM homepage assembled from multiple images.)